Canadian Housing Monitor

June 16, 2025 | 10:01

Canadian Housing Monitor: May 2025

Economist

Robert Kavcic

Senior Economist and Director
Economics

Robert has been with BMO Capital Markets since 2006. He plays a key role... (Read more)

Robert Kavcic

Senior Economist and Director
Economics

Robert has been with BMO Capital Markets since 2006. He plays a key role... (Read more)

In the Doldrums

Canada’s housing market remains subdued, but resale conditions in general are not worsening, while construction activity continues to push ahead. At a high level, it appears that a less-aggressive tone on the trade front and some political clarity in Canada have eased the stress on buyer confidence, but mortgage rates are still not low enough to improve affordability and/or rekindle investor demand. We continue to see subdued sales and listless prices at the national level.

Existing home sales rose 3.6% in seasonally-adjusted terms in May, but were still down 4.3% from a year ago. The bulk of the sales decline is concentrated in Toronto (-11% y/y), Vancouver (-17.5% y/y) and Calgary (-15.2% y/y), while many of the remaining markets are posting modest declines or solid gains (especially across Quebec and Atlantic Canada).

While consumer confidence appears to be off the lows of recent months, there’s still caution over the economic outlook, and the job market has softened. The Bank of Canada’s careful approach to further easing has also pinned variable mortgage rates above 5-year fixed, leaving precious little borrowing-cost relief so far in 2025. Given the strains on affordability (despite lower prices) and tough investment dynamics (negative cash flow and no price momentum), the market looks stalled until rates break lower.

Table 1 - Canada — Existing Home Sales

(% change)

Source: BMO Economics, Haver Analytics, CREA

New listings rose 3.1% in the month (+8.0% y/y), leaving the national market balance still soggy. The national sales-to-new listings ratio inched up to 47.0%, which is still bouncing around the softest levels since 2009 (and the mid-1990s before that).

Prices continued to fade lower at the national level in May, but the weakness is moderating. The MLS benchmark price fell a seasonally-adjusted 0.2% (-2.5% a.r.), which left the year-on-year rate at -3.5%. The national benchmark is now holding 17.5% below peak early-2022 levels.

Southern Ontario remains the weak spot, with a glut of condos hitting the resale market and pressuring prices down. Apartment prices are down in the 6%-to-10% range from a year ago across markets like Toronto, Kitchener-Waterloo and Barrie. Single-detached prices across these markets are holding up better, but are not immune.

Vancouver and some other markets across B.C. also continue to soften alongside a significant flow of new listings. Vancouver is well into buyers' market terrain, with both condo and detached prices down from a year ago.

On the flip side, markets in Quebec and further east are tight almost across the board as steadily rising sales outpace increases in new listings. Price gains in those regions are in double-digits for some property types.

Calgary, long a front-runner of strength, has softened notably in recent months. Sales are down from a year ago, and the tight sellers’ market of the past two years is no longer.

In a separate release, Canadian housing starts rose to 279,500 annualized units in May, a strong follow-up to the like-sized print seen in the prior month. Overall, the level of residential construction remains very firm considering much softer resale market conditions, especially for condos. The 12-month average sits at 244k, while the 6-month average is similarly running at 243k. That said, starts for homeownership/condos have fallen sharply, but the gap is being filled by a thick pipeline of purpose-built rental projects breaking ground. The supply-demand dynamic here—a sudden cooling of immigration-led demand, but long lead times on supply—is likley to pressure rents down in the year ahead.

National Price Trends

Market Balance

Local Market Conditions

Recent Reports of Interest

Canadian Commercial Real Estate Update: The trade war marks a sharp setback in what otherwise would have been a better year for Canadian commercial real estate.

Housing Outlook 2025: A Long Way Home:The Canadian housing market should post modest sales and price gains this year, but don’t expect another exuberant takeoff. Changing secular forces also suggest it’s still a long way back to the 2022 highs.

Canadian Mortgages: Fix or Float? With borrowing costs more likely to fall than rise—and by a lot in a possible trade war—a floating rate mortgage could pay off.

What Canada’s Immigration Shift Will and Will Not Do: Ottawa’s dramatic about-turn on immigration will turn Canada’s 3%+ population growth to near-zero in coming years.

Canada’s Housing Market in Charts: A chart-based tour of the market, and where it might be headed.

Mortgage Rules and Rates: The 3.9% Solution? Mortgage-rule changes will incrementally bolster demand.

Pathways to Affordability for Canada’s Housing Market: You would need to go back to the era of double-digit mortgage rates in the early 1990s to see the last time buying a home in Canada was as expensive as it is today. Is there a route back to affordability and, if so, how long will it take?

Extraordinary Population Delusions and the Trouble with Crowds: The narratives around the population boom have, in our view, been off the mark. Here are five things worth challenging.

Real Estate Investment: The Good, the Bad and the Implications: Does real estate investment make sense at this stage of the cycle? And if not, what are some implications?